>> susie: a big t.g.i.f. on wall street. the dow closed higher by triple digits today just a day after posting its biggest drop in more than a year. >> tom: there may be some relief now that a new rulebook for fixing the nation's financial system is closer to becoming a reality. you're watching nightly business report for friday, may 21. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: this program is made possible by contributions to your pbs station from viewers like you. thank you.

captioning sponsored by wpbt >> susie: good evening, everyone. investors cautiously tip-toed back to the stock market today, after yesterday's massive sell off. tom, all the major averages closed up, but there was still a wave of heavy selling at the open. >> tom: susie, it was a choppy day and at the start of trading. the dow fell below the psychologically important 10,000 level. but it stayed above its flash crash low. by late morning, buyers came back and it finished higher by 125 points. still a lot of worries about financial problems in europe, even though a trillion dollar bailout package got the okay from german lawmakers today. as erika miller reports, investors and traders on wall street are not convinced the selling is over.

>> reporter: you don't have to go to an amusement park to take a wild ride these days. just invest in the stock market. it's not clear what brought buyers back into the market, after this morning's steep sell- off. market strategist alec young believes american investors put european woes into perspective. >> the reality is american exports to europe represent only 5% of american gdp. in addition, s&p 500 sales to europe represent only 14% of the total. so what's happening in europe is not good for corporate america and the american economy. it's not the end world either. >> reporter: floor trader art cashin says it's important to note that selling in the s&p 500 today stopped short of 1,055-- a key market support level. >> when they didn't go further. people said, "wow! maybe that's a double bottom-- maybe that's kind of a magic point where it's cheap enough that people want to buy it." it's kind of a sigh of relief rally. >> reporter: it's impossible to

know whether the stocks are headed for more trouble next week. but here at the n.y.s.e., traders expect the market to stabilize. >> we've got to get rid of the geopolitical doubts and anxieties. a good deal of it may get resolved this weekend. in europe there is a religious holiday that some of the markets will be closed and it gives the governments an extra day to figure out what they can put together. >> reporter: what happens in europe is expected to drive trading next week. financial regulatory reform in washington is also expected to play a role. >> i've seen estimates that 20%- 25% of bank profits could be at risk as a result of the regulation that's currently on the table. and given that the financials are such a large part of the u.s. stock market, i think that's a secondary factor driving the volatility recently. >> reporter: even though may has been a brutal month for the stock market, investors should not lose perspective. the dow and the s&p 500 are

still up more than 50% since their lows 14 months ago. erika miller, "nightly business report," new york. >> tom: wall street reform is well on its way to becoming law. after the bill passed the senate last night, members of the senate and house are now working to put a final measure on the president's desk by july 4th. but while congress is likely to agree on how to reshape financial regulation, the business community wants to stop lawmakers in their tracks. david hirschmann of the u.s. chamber of commerce says the legislation is a huge mistake. senator chris dodd, who chairs the senate banking committee, disagrees. >> unfortunately, we think the senate has chosen the wrong approach, an approach that will perpetuate uncertainty, harm businesses on main street that had nothing to do with this crisis, and fundamentally fail to provide the regulatory structure our country really needs. >> seven million homes have been lost because of what they did or didn't do as industry, not to mention the decline in value and the loss of wealth in this country. so it is a rather arrogant statement for the chamber to be making about what the

implications of this bill may be considering what they cost us because of what they did and didn't do for a long time. >> tom: one of the things wall street did do for a long time was create derivatives. those contracts can be used to manage risk and to create it. the financial reform legislation could move the often shadowy world of derivatives into the sunlight. but as darren gersh reports, that move is not without controversy. >> reporter: the subprime mortgage crisis was bad enough, but it was made worse by derivatives. those are complicated financial contracts that operate like a bet or an insurance policy. in the financial crisis, derivatives expanded that mortgage risk and spread it around the world. the senate financial reform bill tackles that problem by forcing banks to spin off their derivative operations. consumer advocates like public citizen's robert weissman fought for the provision and are working to make sure it is signed into law. >> this is the kind of business we should not want in the united states. we should not want it to exist

in the united states. we shouldn't want it to exist anywhere in the world, but we shouldn't want the business that relies on conning people, tricking people, even sophisticated investors to take place within our borders. >> reporter: companies ranging from real estate developers to oil drillers use derivatives to manage their risks. and the obama administration and federal reserve chairman ben bernanke say banks need to provide those services. but slicing off the derivatives business will weaken banks, says industry lobbyist scott talbott without addressing the risk to the system. >> the better solution is not to prevent them or force them to be moved someplace else, but rather to strengthen those parties who engage in derivative transactions, to save for a rainy day, to protect against any downside risk of the derivative activity itself. >> reporter: derivatives also account for billions of dollars in industry profits. taking them out, says washington analyst steve myrow could reduce the bank industry's ability to lend. >> you can't have sustained growth going forward if you don't have a viable financial sector.

>> reporter: inside the beltway it is considered a safe bet banks will win this and other battles as the financial reform bill heads to a house/senate conference. but house financial services chairman barney frank was not ready to take those odds today. >> i wouldn't take a lot of investment advice from banks if they aren't better at that than they are at politics. >> reporter: the derivatives fight is one of the few big battles left to be resolved before lawmakers can meet their july 4th goal for a presidential signing ceremony. darren gersh, "nightly business report," washington. >> susie: here are the stories in tonight's n.b.r. newswheel: the dow rose 125 points, the nasdaq gained 25 and the s&p 500 added 16.

in the gulf of mexico is a task force on the oil disaster in the gulf of mexico is supposed to report its findings tomorrow. meantime, b.p. said it's siphoning 2,000 barrels of crude a day. that's down but just next week, b.p.'s engineers will shoot heavy mud into the well. as the company tries a new way to stop the flow oil. >> tom: still ahead, our friday market monitor says with so much volatility in the market, he calls it a "blindfold yourself and buy" opportunity. he's duncan richardson of eaton vance management. >> susie: a big day for the new chrysler-- it launched its first new vehicle built in detroit since it emerged from bankruptcy about a year ago. the 2011 jeep grand cherokee will be in showrooms in july. a short while ago i talked with chrysler ceo sergio marchionne and michigan governor jennifer grantholm. i asked marchionne why the new jeep is important for chrysler.

>> well, it's the first new car that chrysler is producing after having come out of bankruptcy. it reflects all of the best and -- all of the best that exists in terms of manufacturing high end quality. the car is, in my view, probably the best quality car that chrysler has ever built. >> susie: governor jennifer grande prairie, what does it mean for the state of michigan. >> it means that the auto industry is back, and chrysler is back, and 1100 new jobs, which was announced today. a second shift at this plant. and it means for us here in michigan, we're going to be producing, as sergio marchionne, a new jeep. >> susie: sergio marchionne, what kind of sales do you expect from this jeep, and how does it stack up against the competition? >> i mentioned earlier, it

is the best vehicle in its class. we don't normally announce projected volumes. roughly 75% of the volumes of the grand cherokee will be in the u.s., and the rest will be outside. as the governor mentioned, we're adding on a second shift. obviously, we have additional production capacity, if we add on a third. but roughly two-thirds of the plant volumes will be in the marketplace by the third quarter. tel>> susie: tell us a little aboutr about the financial outlook for chrysler and will the company be profitable? >> i think we stated we'll be at a break even in 2010, and that will be the best number for the year. and all of the other projections that were made has been confirmed. we intend to burn less than a billion in cash this year. in all likelihood, we don't even need to burn

any as long as the performances continue at this levels. >> susie: governor, today president obama announced new rules for auto emissions for trucks. what does this mean for auto manufactures in your state? >> it means there be one nationwide standard. instead of seeing a state by state, the automakers can benefit from one standard, rather than 50. it also means we'll see more emphasis on fuel-efficiency and on electric vehicles. in addition to this great product right here, all of our automakers will be producing electric vehicles. we want michigan to be the center of the electric vehicle in the world. it sends the right market signals. >> susie: sergio marchionne, i understand this week that the company paid back some of the

money of the loans it owed to the government. do you expect tofully repay those taxpayer loans? >> they will be fully repaid by 2014. >> susie: and that's for sure? >> that's for sure. >> susie: and i know there has been a lot of speculation about chrysler selling its shares to the public. first of all, why do you want to do an i.p.o.? and second of all, when will it happen? >> look, the biggest shareholder of chrysler today is reba, which is the trust that has been put up for, to satisfy the obligations to the employees. we need to effectively settle part of the obligations that were converted into equitytity the time -- at the time of the bankruptcy. it needs to be done as quickly as we can. >> susie: and what kind of reception do you expect

on wall street? >> hopefully a good one. >> susie: sergio marchionne, thank you for your time, and governor jennifer grantholm. >> tom: speaking of automotive i.p.o.s, there is a new development tonight in general motors' plans to go public. the treasury has selected lazard to advise it on a g.m. stock sale. uncle sam owns more than 60% of the automaker thanks to the bailout under the tarp plan. lazard is being paid half a million dollars a month to weigh in on planning for an initial public offering.

>> tom: it was a wicked week for >> tom: it was a wicked week for american stocks investors with the major indices ending lower for the third time in the past four weeks. after some slim gains on monday, the dow dropped tuesday and wednesday before the big drop on thursday. thanks to the buying today, for the week, the dow was off 4%. it was a similar pattern for the nasdaq, only more so. on the week, the nasdaq dropped 5%. and the s&p 500 fell 4.2% this week. early friday, the index briefly dropped below the lows seen during the flash crash two weeks ago. it has been a rough four weeks for stock investors with the s%p

500 down more than 10.6% since its high on april 23rd. a few of some of the biggest stock mutual funds have done slightly worse. the biggest stock fund out there, american funds growth fund dropped a little more than 12% from the high. vanguard's total stock market fund was off 12.3%. fidelity's biggest stock fund, the contrafund, performed about off by 11.3%, while the dodge and cox stock fund was slipped a little more down 15.5%. these numbers come courtesy of morningstar. today's leaders in the choppy market were financial stocks. it may have been some relief buying after the approval of the financial regulation bill by the senate. among the big banks, j.p. morgan led the way. it was the best performing dow industrial component. morgan stanley saw better than usual volume on its move up. and bank of america stock was very active during the rally. goldman sachs also participated in the financial stock rally. tonight, the wall street journal reports there is no settlement deal between goldman and the securities and exchange commission over civil fraud charges. the stock was up at much as 5%

today on speculation about a possible settlement. a couple of exchanges were among the financial winners. the c.m.e. group and the intercontinental exchange are seen as the probable winners if the derivative reform effort is successful as the differences between the senate and house bills get worked out. the senate proposal would force banks to put up cash at third party clearinghouses such as the c.m.e. and intercontinental exchange. the c.m.e. focuses more on a broad range of derivatives while ice has made significant in- roads with credit default swaps, which are effectively insurance bets on a borrower's ability to repay their debt. both stocks moved up more than 5% today. holding back technology today was dell. we reported last night that its first quarter saw profits, sales and shipments gain, but the stock sold-off. shares were the weakest among the nasdaq 100, dropping almost 7% on three times its normal volume. leading the way up on the nasdaq was communications semiconductor

maker marvell technology. shares jumping more than 8% after reporting a big jump in quarterly revenues. a couple of retail earnings finished out the week, including better than expected news at ann taylor. profits rebounded for a year ago loss and were three cents better than expected. margins grew thanks to less discounting. shares responded well, rebounding more than 8%. since cutting costs and inventories over the past year, the stock has tripled. despite the market turmoil this week, a couple of brave companies sold stock to the public for the first time. accretive health manages revenue for hospitals and doctor groups. it priced below its expected range at $12 per share on thursday. today it was unchanged at $13.55. reach local sells internet marketing software. it also priced below its range the i.p.o. price was $13. on thursday. today it continued to see gains. and that is tonight's market focus.

>> susie: google got the green light today from regulators to buy mobile ad service ad-mob. and, the search giant can thank apple for helping to okay the $750 million deal. the federal trade commission said apple's entry into the mobile advertising market shows there is competition in the industry. now the feds say they'll keep tabs on the mobile ad business looking for anti-trust problems. >> tom: fear won over market fundamentals this week. so says tonight's market monitor.

he's duncan richardson, chief equity investment officer at eaton vance management. he joins us from boston. >> tom: duncan, welcome to "nightly business report." >> thanks for having us, tom. >> tom: right wild swings, but for the whole month of may, what do you make of this month? >> it was really a decline over the last month that was offsetting the rise from the lows in february. i think it really is that building up of fear and a number of factors that came together that raised the fear index, the vix index, if you will, on the market. it has in the past been almost a blindfold and buy. the vixit 40 was very similar to where it was right before the lehman problems in september of '08. and i think that we have to look at the market and determine whether or not the market is more similar to that or different somehow. and we come out that there

is a couple of things that are adding to that fear: the greece situation, the sovereign debt, and the regulatory reform bill that has finally gotten passed adding to the volatility, and a holdover from the flash crash. >> tom: so all of those things together has gotten us to a fear level that is almost a blind fold and buy type of situation. clearly it sounds like you're looking for opportunities in this market. what about the fundamentals? you're still bullish there in terms of corporate earnings and the improvement or at least the stabilization in the u.s. economy? >> the fundamentals have actually been pretty good. they've been pushed to the background in terms of earnings report and where corporate balance sheets look, in terms of cash flow, these are encouraging. we feel that the market itself can get back to record earnings in a 12 to 18-month period. if the market could look

at $100 of earnings on the s&p, we see the market as undervalued on the earnings. >> tom: clearly a very bullish call. one of the areas you brought along with you is perhaps more defensive. health care. a lot of folks have been looking at health care because of the reform effort. the xlv select spider change fund has gotten hit, but over the last 12 months has clearly been trending higher. >> yeah. that's an area we like. most of the regulatory risk is out there. maybe whatever damage has been done to the stocks is most over. there is a long way between the actual passage of the health care and the actual implementation of the reforms. that is going to take three or four years. we like those stocks. they've got great dividend yields. it almost gis -- gives you an income replacement and a potential for those stocks to grow. keep in mind on the health care, it has a tremendous

demographic wave behind it, not only in this country but around the world. >> tom: the aging boomers here in the united states and worldwide. how about technology? we've heard from a couple of tech giants, including hewlett-packard and dell, positive earnings. what do you like about the tech sector? >> tech, to us, looks like it did at the end of the tech wreck, which was from '83 to '90. the evaluations of some of the large cap tech stocks look very attractive. there is a product cycle or p.c. replacement cycle along with productivity demands that will be largely independent of the economic growth. the tech can grow faster. great cash flow there and great ability to buy back shares. >> tom: any disclosures for those sectors tonight? >> don't know any of those e.t. s., but at our company, we certainly own a number of health care

stocks and technology stokes. >> tom: duncan richardson, chief executive officer at eaton vance management. >> susie: here's what we're watching for next week. our friday market monitor guest is kurt reiman, head of thematic research for u.b.s. wealth management americas. next week, quarterly earnings from retailers borders, costco and tiffany are out. monday, we go inside the world of high frequency trading to hear what those traders say about the flash crash and new calls for regulation. billionaire financier bennett lebow is hitting the books. he's buying a 15.5% stake in borders group, the bookseller. borders hopes to use le-bow's $25 million cash infusion to help launch an electronic bookstore to compete with barnes and noble and amazon. those two firms already have a huge head start in that space. lebow made his money in tobacco and is now chairman of liggett owner vector group. >> tom: it will soon cost you more to bail on your wireless

contract if you have a smartphone with a.t&t. the company's hiking early cancellation fees by 85% to $325 for smartphone and netbook customers who sign new deals after june first. june is also expected to be when the newest version of the iphone launches on a.t&t. the iphone has driven subscriber growth but the carrier is expected to lose its exclusivity next year.

>> tom: finally tonight he's green. he's mean and he is really expensive. we're talking about shrek! a manhattan imax movie theater is charging $19 a ticket to see the new "shrek forever after" film that starts tonight. and it's not alone is betting high prices won't keep fans away. other theaters in the new york city area are charging $16.50 and up for the movie. susie, this is the 4th installment of the popular "shrek" series from dreamworks animation. but it's the first one done in 3.d., which is the hot new trend in movies these days. >> susie: and there will be long lines to get in, even at $20. >> absolutely. a mean, green guy and bringing in lots of green. that is "nightly business report" on this friday, may 21st. i'm tom hudson, good night to everyone, and you, too, susie. >> susie: have a great evening, tom. i'm susa

"nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

[mysterious music] ♪